Exploration drilling will commence in 2019 and 2020 for oil and gas companies that won tenders in 2014 and 2015

Exploration drilling will commence this year and next for oil and gas companies that won tenders in 2014 and 2015, based on the contracts signed with the with Myanmar Oil and Gas Enterprise under the Ministry of Electricity and Energy (MOEE), ministry officials said.

This is the next phase after seismic surveys and testing operations were carried out over the past five years under the terms of the Production Sharing Contracts (PSCs) between the companies and the government. It includes both onshore and offshore drilling. 

Around 20 oil and gas companies, including Thailand’s PTTEP, Italy’s ENI, South Korea’s Daewoo and Australia’s Woodside Energy have commenced drilling and other geological and seismic activities in Myanmar so far this year.

“The companies have reached the drilling phase under the contract. Should they decide that it is not commercially viable to move on to production after drilling has been conducted, they can choose not to continue with the contract,” said U Min Min Oo, assistant secretary of the MOEE.

In the past, some firms gave up their blocks after the study period, claiming there were no prospects. “By drilling, the companies can decide if there are sufficient reserves or not. If they believe the prospects are good, they will spend the money to continue drilling,” he said. 

However, the MOEE has the right to seize a proportion of the investments made and deposited in the bank in the event that the companies do not move on to production or if they renege on any other terms, he said.

“According to the nature of the contract, the companies are committed to drilling beyond exploration. However, if there is a valid reason to discontinue drilling the MOEE will accept it,” U Min Min Oo said, adding that some companies may be experiencing financial difficulties from the fall in global oil prices. 

The MOEE will also permit delays in drilling as a result of the companies taking longer than expected to complete environmental conservation work or due to compensation-related issues with locals who inhabit areas around the drilling site.

Last week, ENI Myanmar said it will commence oil exploration drilling at the onshore block RSF-5 located in Magawe Region by the end of the year. The block sits across 320,000 acres and ENI is allowed a six-year exploration period. 

ENI won the bid to explore at RSF-5 in 2014 and signed an agreement with the government and Myanmar Oil and Gas Enterprise in 2015. ENI owns a 90 percent stake in the RSF-5 block while local company Myanmar Petroleum Exploration and Production owns 10pc.

An Environmental Impact Assessment (EIA) will be conducted by ENI and submitted to the Environmental Conservation Department. Results will be announced to the public next month, according to the company. ENI will also hold a meeting with residents affected by the project in Magwe township to present the initial findings of the EIA.

Currently, there are 32 petroleum firms from 20 countries conducting exploration and production work at a total of 63 blocks.

(The Myanmar Times: https://www.mmtimes.com/news/companies-commence-exploratory-drilling-2019-and-2020.html )

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